Hedge Fund closes its doors after devastating losses on FTX


After suffering a loss equivalent to over half of its total assets due to the failure of FTX, one of the world’s biggest cryptocurrency hedge funds, Galois Capital, has announced that it will be closing its doors.

When the Financial Times published an article on the closure of the fund, the company sent out a tweet confirming the news. The failure of FTX in November 2022 caused shockwaves to spread across the cryptocurrency industry.

FTX and its affiliated companies, which are nearly one hundred and thirty companies, filed for bankruptcy protection, including West Realm Shires Services and Alameda Research, filing for insolvency under Chapter 11 of the US Bankruptcy Code.

The bankruptcy petition disclosed that FTX owes close to $3 billion to 50 of its top creditors, all of whom were clients of the company.

Galois Capital, founded by Kevin Zhou and Ken Xu, was one of the high-profile victims of the FTX implosion. Half of the $200 million dollars worth of assets it managed last year were left trapped on the exchange when it collapsed.

In November 2022, Zhou informed investors that it would take a few years to recover “some percentage” of the $40 million that was stuck at FTX.

He promised to work tirelessly to maximize the chances of recovering the funds, but the situation didn’t improve. In January, CoinDesk reported that FTX claims were going for around 13 cents on the dollar on the bankruptcy marketplace Xclaim.

Galois Capital confirms the closure

Zhou announced the closure of the fund in a letter to investors in which he wrote that given the gravity of the FTX crisis, they do not believe it is tenable to continue running the fund both financially and culturally.

His statement was included in the letter. He continued by saying that he is, once again, very sorry for the predicament that they find themselves in at the moment.

It was verified by the hedge fund that it had closed down all of its trading activities and sold off all of its holdings due to the fact that it was no longer sustainable. Galois Capital has it in its plans to give back any unspent money to the investors.

Galois Capital’s plan

The hedge fund has promised that it would refund 90% of the money that isn’t trapped at FTX to its clients, with the remaining 10% of the money being kept on hold until all conversations are concluded.

These setbacks are temporary and will come to pass. However, I, even now, remain hopeful for crypto’s long-term future.

Kevin Zhou

While the recent developments have dealt a significant blow to the industry, experts say that the future of crypto remains promising.

As it is possible that additional funds may have similar issues as the crypto sector develops, it is crucial that investors thoroughly consider the risks before investing.

Nevertheless, the resilience of the industry and the growing interest from traditional finance players suggest that crypto is here to stay.

Stablegains faces legal firestorm over UST advertisement


Stablegains cryptocurrency exchange, is facing a legal battle after allegedly promoting and selling unregistered securities.

The US Securities and Exchange Commission (SEC) claims that the exchange was involved in the sale of UST, which it believes is an investment contract or a derivative product of LUNA, both of which are securities.

Due to the fact that the exchange failed to register UST as a security, the SEC has decided to file a complaint against the firm.

What the lawsuit states

The SEC states that purchasers of UST, including through Stablegains, invested in a common enterprise. Terraform Labs (TFL) pooled the funds from UST purchasers and seigniorage, and then used the money to develop and expand the Terra ecosystem.

The fortunes of all UST investors are linked to each other and to the success of the Terra Organization’s efforts, which is a common enterprise.

The SEC further alleges that Stablegains’ users were never informed of its trading activities involving UST/LUNA securities or the staking of these securities on the Anchor Protocol Platform.

Furthermore, the exchange did not disclose the inherent risks associated with its purchases of UST, thereby misleading its investors.

The SEC has also accused Stablegains of operating as a broker-dealer without being registered under the Exchange Act. The exchange is said to have brought together the funds of multiple buyers and sellers, and transmitted and managed digital asset buy and sell orders for UST using funds deposited by its consumers.

Stablegains was allegedly motivated by its own financial interests, as it received a direct financial benefit from each purchase of UST it conducted using depositor funds.

The exchange further benefited from purchases of UST because such purchases supported a liquid trading market for UST, which in turn made the Stablegains platform more attractive to depositors.

The SEC has also taken issue with Stablegains’ terms of use, which included limitations on liability and one-sided arbitration provisions intended to deprive investors of their day in court.

The exchange’s withdrawal release scheme was allegedly designed to discourage retail investors with limited resources from filing claims.

The legal action against Stablegains comes after the UST/LUNA crash in which the exchange was forced to sell a substantial portion of its Bitcoin holdings at a substantial loss to save the plummeting UST.

Stablegains violated securities laws

The SEC argues that the crash demonstrated the interconnectedness of LFG and TFL with each other and with LUNA and UST. The SEC also claims that UST was always an investment contract and a security, and that Stablegains violated Sections 5(a), 5(c), and 12(a)(1) of the Securities Act.

The SEC’s complaint seeks damages and interest from Stablegains, and the SEC has offered to tender to the exchange the UST or a substantial equivalent realized upon the sale of all UST upon the liquidation of their position in Stablegains.

In exchange for such tender, plaintiffs are entitled to recover the amount of consideration they paid to purchase the tendered UST. Stablegains has not yet responded to the SEC’s complaint.

What is going on with Binance’s U.S. business? Details


CEO Changpeng Zhao of Binance has disputed rumors that the company is about to sever connections with its American business partners and delist tokens from US-based projects, including Circle’s USD Coin (USDC).

Recently, the company has been under greater regulatory attention from US authorities; thus, this news comes at an interesting time.

What sparked the rumor?

Earlier this week, it was reported by Bloomberg that Binance was considering severing ties with financial and other service providers. Tokens like USDC may be delisted as they reevaluate their venture capital investments in the United States, according to reports.

CZ oppugned the idea of a “US-based token” and tweeted that Blockchain has no boundaries in response to the claims. He also said that his company is holding off on bidding or investing in several insolvent American firms until it receives approval.

Customers in the United States are told to use Binance.US. US authorities are now looking at both companies. Binance.US and trading businesses with direct links to CZ are apparently under investigation by the US Securities and Exchange Commission.

On February 8, Binance Holdings suddenly stopped processing US dollar bank transactions, indicating there may be issues with the company’s financial system.

In light of rumors that the SEC was planning a lawsuit against the dollar-pegged stablecoin BUSD, the New York Department of Financial Services ordered Paxos Trust to cease minting the coin on February 13. It caused a flood of withdrawal requests to reach Binance.

On February 15, Binance’s chief strategy officer Patrick Hillmann was quoted as saying the business anticipated financial fines from US authorities owing to prior compliance concerns.

The world’s largest exchange continues to weigh the costs and benefits of complying with these regulations and making the required adjustments to its business strategy to best serve its worldwide user base.

On the other hand, fresh sources warn that the firm may be in for further legal difficulties in the US.

Unauthorized Binance insider trading

In related news, another transaction was performed on Binance by a wallet on February 17 that had been involved in early token listings. This time, the trader bought Gains (GNS) tokens and sold them immediately before the tokens were listed on the most prominent cryptocurrency exchange in the world.

A crypto trader, whose identity has been kept secret, gained almost $100,000 by buying a token minutes before it was posted on Binance, according to a study by Lookonchain.

Only 30 minutes before Gains Network (GNS) tokens were launched on Binance, the on-chain detective uncovered a trader who acquired them for $208,335. Within an hour of the listing, GNS’s price had risen 51%, from $7.92 to $12.01, allowing the trader to generate a profit of $106,747.

The deal was mockingly labeled “smart money” in a tweet by Lookonchain. Yet, the United States, Canada, the European Union, and many other jurisdictions worldwide make it unlawful to engage in insider trading.

An example of trading on non-public information that might damage market integrity and fairness is trading on information regarding a listing that has not yet been made public.

Inside the SEC’s case against Terra: Key takeaways you need to know


The United States Securities and Exchange Commission (SEC) has charged Do Kwon and Terraform Labs for laundering more than $100 million worth of Bitcoin from the platform following its collapse in May 2022.

The SEC complaint filed in the U.S. District Court for the Southern District of New York on Feb. 16 revealed that Kwon had transferred over 10,000 Bitcoin from the platform and the Luna Foundation Guard to a cold wallet, then to a Swiss bank account to convert to fiat.

Kwon and his company may have access to over $100 million in cash since withdrawals started in June 2022. Here are the key takeaways from the lawsuit:

Artificially restored TerraUSD’s dollar peg

The SEC complaint also accused Kwon of artificially restoring TerraUSD’s (UST) dollar peg after the stablecoin had been one of the largest by market capitalization at the time the platform collapsed.

The platform solicited a third party to purchase “massive amounts of UST to restore the $1.00 peg,” misleading investors as to its stability and reliability.

According to the complaint, “UST’s price falling below its $1.00 ‘peg’ and not quickly being restored by the algorithm would spell doom for the entire ecosystem, given that UST and LUNA had no reserve of assets or any other backing.”

Tokens were crypto asset securities

The SEC also claimed that several of the tokens involved in the collapse of Terra were “crypto asset securities” falling under its regulatory purview. These tokens included UST, LUNA, and wrapped LUNA, as well as MIR tokens and mAssets developed under Terra’s Mirror Protocol.

The SEC alleged that the company solicited investors for these crypto assets by touting their profit potential, repeatedly stating that the crypto assets would increase in value based on the company’s development, maintenance, and promotion of its blockchain, protocols, and the entire ecosystem.

Partnership with Chai payment app

Terra’s business connections were also a target of the financial regulator, as the SEC reported Chai – a South Korean payment app linked to Terra at the time – “did not process or settle transactions on the Terraform blockchain.”

The defunct company allegedly reported transactions “that had already happened in the real world using Korean Won” while claiming to the public that Chai transacted on the blockchain.

In at least five instances between October 2021 and March 2022, there were one or more days when no transactions whatsoever were confirmed on the Terraform blockchain. Yet, there is no evidence that the Chai payment application was not functioning during those periods.


Several have also questioned the SEC’s decision to bring charges against Terra and its creator, Do Kwon, just now. Although the SEC has been clamping down on crypto-related firms for months, many are wondering why it took almost a year for the agency to prosecute Kwon and his company.

Others have argued that the SEC is only investigating half of the misconduct, leaving the company and Kwon free to avoid responsibility for the other half.

Another FTX exec bites the dust: Guilty plea deal struck with the Feds


Nishad Singh, a former executive of crypto exchange FTX, is reportedly preparing to plead guilty to US criminal charges over his alleged involvement in an extensive multiyear fraud scheme.

FTX’s Singh has been in negotiations with authorities

Singh has been negotiating a deal with Manhattan prosecutors as they prepare to file fraud charges against him, according to sources familiar with the matter.

The details of the agreement could potentially involve cooperation with authorities, which would further sequester Sam Bankman-Fried, who has pleaded not guilty to an eight-count indictment and is awaiting trial.

The ongoing investigation into the spectacular collapse of FTX in November 2022 is one of the most high-profile corporate crime cases in the history of the United States.

Officials have alleged that Bankman-Fried orchestrated a years-long scam that involved misleading investors and misusing billions of dollars of FTX customer funds for personal expenses and risky bets at Alameda, the trading firm affiliated with the crypto exchange.

The former FTX exec played a significant role in the day-to-day operations at FTX as the head of engineering. He also had a close personal relationship with Bankman-Fried and even lived with him in a penthouse in the Bahamas.

Singh was hired at Alameda in 2017 before establishing FTX two years later with Wang and Bankman-Fried. He contributed to writing the software that the exchange was built on and played a key role in the launch of FTX US in 2020.

If he cooperates with authorities, he could provide valuable insight into the campaign finance side of the defunct company, which US officials have been looking into. Bankman-Fried’s indictment accused him of violating campaign finance laws.

He has given more than $9.3 million to Democratic candidates and committees since 2020, according to filings. Among the largest recipients was Mind The Gap, a political action committee founded by Bankman-Fried’s mother that received $1 million from Singh in April 2021. He also received hundreds of millions of dollars in loans from Alameda Research, according to bankruptcy court filings.

Other details in the FTX case

Two other former associates of Bankman-Fried, Gary Wang and Caroline Ellison, pleaded guilty last year to charges in connection with their roles at FTX and Alameda Research and are working with prosecutors.

The Commodity Futures Trading Commission and the Securities and Exchange Commission are also planning to sue Singh over his role in the alleged scheme, according to one of the sources.

The restructuring team overseeing the bankruptcy has warned investors to be on the lookout for scam tokens that aim to take advantage of the exchange’s troubles.

In a recent tweet, the company cautioned, “The FTX Debtors have not issued any debt token, and any such offers are unauthorized.” It is unclear if the warning was related to a new token called FTX Users’ Debt, or FUD, listed on Justin Sun’s Huobi exchange since February 7.

FTX’s troubles have been a major blow to the cryptocurrency industry, and the ongoing investigation into its alleged wrongdoing has rattled investors worldwide.

As the FTX saga continues to unfold, more details will likely emerge in the coming months. It remains to be seen whether Singh’s cooperation will lead to further revelations that could have serious implications for the crypto industry as a whole.

Japan’s digital yen is about to be launched: Here’s what you need to know


After months of conducting experiments on Central Bank Digital Currency (CBDC), the Bank of Japan has announced that it will be launching a pilot program for the digital yen in April 2023.

This move is in line with “The Bank of Japan’s Approach to Central Bank Digital Currency,” released in October 2020, and will involve testing the end-to-end process flow and exploring potential challenges for connecting the experimental system with external ones.

Japan’s plans for the deployment

The Bank will complete the Proof of Concepts (PoCs) in March 2023, as initially scheduled. In the pilot program, a system for experiments will be developed, which will involve a central system, intermediary network systems, intermediary systems, and endpoint devices configured in an integrated manner.

While actual transactions are not assumed to take place among retailers and consumers in the program, the Bank will test the technical feasibility of the basic functions of a CBDC.

When it comes to retail payments, the Bank of Japan wants to debate and study a broad variety of subjects with private enterprises; therefore, they’re launching a pilot program and a CBDC Forum at the same time.

The Bank plans to hold information sessions in March to explain the selection process and requirements for participating in the CBDC Forum.

The goal is to proceed with institutional arrangements for CBDC in an appropriate manner, and to establish a platform for discussions among the Japanese public.

To facilitate discussions, the Bank of Japan will establish working groups to take into account linkages among the topics in consideration.

The CBDC Forum will discuss and explore alternative data models (e.g., token-based) to account-based ones and offline payments, among other topics.

Bank of Japan to select participants for CBDC forum

Private businesses with an interest in overlay services on top of a CBDC as a public good will exchange views from the perspective of “the business and technology of CBDC” to explore design requirements for the CBDC system in facilitating overlay services.

The Bank of Japan will investigate the technical feasibility of challenges and technologies or functions, such as privacy protection and universal design, that could become necessary.

In fiscal 2023, the Bank of Japan will select participants for the CBDC Forum and contractors for developing the experimental system, proceeding with discussions and explorations with the participants and the development of the system accordingly. The Bank will issue public updates on these matters promptly.

This move is significant, as Japan is now joining a growing number of countries that are experimenting with CBDCs. The launch of the digital yen could have far-reaching implications for the country’s economy and the global financial system.

While the Bank of Japan is taking a cautious approach to the launch of the digital yen, it is clear that this is a major step forward for the country in the world of digital currencies.

The CBDC Forum and pilot program represent important steps towards the adoption of CBDCs in the country and could set a precedent for other countries looking to develop their own digital currencies.

The Bank of Japan’s commitment to transparency and collaboration with private businesses will be crucial in ensuring the successful launch of the digital yen and promoting its widespread adoption.

Why Bitcoin skyrocketed 10% to hit $25k: A close look at potential drivers


The price of Bitcoin (BTC) surged past the $25,000 mark for the first time since August 2022 before dropping back below this threshold. As of press time, Bitcoin is valued at exactly $24,968.

The 10% jump from $22,000 to $25,000 surprised many, given the recent regulatory crackdowns on cryptocurrencies. This surge is causing investors to wonder what the potential drivers of this price increase are.

Regulatory threats against stablecoins

The current threat of regulatory action against stablecoins may be one cause for this increase. Maybe, as a result, investors are flocking in the other direction to safe havens like Bitcoin and Ethereum (ETH).

Many stablecoin holders, dissatisfied with the 0% interest rate they were receiving, began diversifying their holdings into other cryptocurrencies. This pertains to holders who don’t have the ability to switch to fiat.

This theory would be bolstered if perp financing rates dropped below zero, as investors seeking to maintain risk neutrality would likely liquidate their perp holdings in exchange for Bitcoin or Ethereum.

The S&P 500 is still very close to its highs of the last six months despite the hawkish Non-Farm Payrolls (NFP) and Consumer Price Index (CPI) data that has been issued in recent weeks.

As the demand for cryptocurrencies is connected with the stock market, this protects BTC from being dragged down. Even with layoffs in the computer industry, the economy as a whole is doing well since professionals in that sector makeup just 2% of the workforce.

Hong Kong legalizing crypto

The anticipated legalization of cryptocurrency trading in Hong Kong is another plausible explanation for Bitcoin’s recent price increase. Speculation that Hong Kong would make retail trading lawful for its people in June has been circulating since at least last October.

This follows reports that China is considering softening its anti-crypto stance and may abandon its zero-COVID policy. China’s economy is now second only to the United States in terms of growth rate. Maybe this change will be the catalyst for the next full bull cycle.

This month has been fraught with geopolitical tensions, and if the United States pulls back, other foreign leaders may see it as an opportunity to step in.

From what we can tell in the news, or at least from Twitter, we seem to be on the verge of World War 3. It’s hardly shocking that some value is moving away from SWIFT and into self-custodial, decentralized systems.

The verdict

Although though Bitcoin has gotten off to a strong start in 2023, the cryptocurrency’s value is still 63% lower than its all-time high (ATH), which was $69,044 and was set on November 10, 2021.

The recent increase in the price of Bitcoin may be attributed to a number of different variables, including those that have been mentioned in this article, as well as changes in macroeconomics and a rising interest in equities connected to cryptocurrencies.

These and other market developments that may affect Bitcoin’s future course should be closely monitored by investors as time goes on.

Coinbase CEO warns Unites States may lose financial hub status over crypto


Brian Armstrong, founder and CEO of Coinbase, has warned that the United States risks losing its status as a financial hub in the long run due to a lack of clear regulations on cryptocurrency and a hostile regulatory environment. Armstrong has urged Congress to act swiftly and pass clear legislation to provide guidance on using digital currencies.

Armstrong cautions that other countries, such as the European Union (EU), the United Kingdom (UK), and now Hong Kong, are taking the lead in creating a legislative framework for the use of digital currencies.

Cryptocurrency is an open market that is accessible to anybody, anywhere in the globe. These remarks were made by Armstrong at a time when Hong Kong is in the process of seeking approval for an amendment to its Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022. This bill provides for a more expansive regulatory interpretation of cryptocurrencies.

Top crypto journalist says the comments caused misunderstandings

There has been some misunderstanding about Hong Kong’s cryptocurrency policy due to Armstrong’s comments, top blockchain reporter Colin Wu states.

He added that while Hong Kong is promoting WEB3, the future of digital currencies is still uncertain. Hong Kong has a limited number of cryptocurrencies that can be listed on compliant exchanges such as BTC ETH.

The industry expects the amended bill to be approved next year, but its effects are already evident. Many non-compliant exchanges, such as FTX and BITMEX, have left Hong Kong, and others are applying for relevant licenses.

The Hong Kong Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, when passed, will require all entities engaging in crypto or virtual asset-related business to apply for a license.

Those who trade in BTC and ETH only have until March 1, 2023, to obtain a license voluntarily. After that date, anyone engaging in digital currency-related business in Hong Kong, including providing wallet services, must apply for a license. The policy is meant to provide a regulatory framework for virtual assets and reduce risks.

Interpreting the new policy in Hong Kong

Hong Kong’s Securities and Futures Commission head of financial technology has mentioned that Hong Kong has its own set of policies related to virtual assets and not those of mainland China.

The Hong Kong government is willing to open up discussions on the opening up of individual investors. The policy declaration announced that some legislation should be made for smart contracts to consolidate their legitimacy, helping Web3.

There are no legal barriers to starting a business in Hong Kong, especially for WEB3 startups. Hong Kong’s legal framework encourages and welcomes such businesses.

Compliance is high, the risk is low, and a set of rules can guide tokenization. The rules of the rule of law environment for starting a business in Hong Kong are clear.

The key to success is implementing these rules step-by-step, which could be challenging, but the benefits are significant. While other nations such as the EU, the UK, and Hong Kong are making strides in developing a regulatory framework for digital currencies, Hong Kong’s policy is not yet clear.

Latest on SBF: Identities of bail guarantors revealed – Why they did it


The crypto world was abuzz with the news of Sam Bankman-Fried’s arrest, but what no one knew until now were the identities of two individuals who had put their own money on the line for SBF.

Who signed SBF’s bail?

Former Stanford Law School dean Larry Kramer, and a research scientist at Stanford University, Andreas Paepcke, have been revealed as the co-signers of FTX founder Sam Bankman-Fried’s bail.

The two men contributed $500,000 and $200,000, respectively, towards Bankman-Fried’s bond, according to court records unsealed on February 16th.

The FTX founder’s parents, Joseph Bankman and Barbara Fried, who are both professors at Stanford University’s law school, also contributed to the bond by guaranteeing the value of their home in Palo Alto, California, where Bankman-Fried is allowed to remain ahead of his criminal trial on fraud charges.

Kramer said that he and his wife are friends with SBF’s parents, and that they had been close friends since the mid-1990s.

He stated that Bankman and Fried provided food and moral support to him and his family while frequently stepping in at moments’ notice to help during his family’s battle with cancer.

Kramer further added that they had been loyal and steadfast friends and that he contributed to the bond in his personal capacity without any business dealings or interest in the matter other than helping his friends.

Prosecutors in Manhattan brought eight criminal charges against Bankman-Fried in December, alleging that he misled investors and customers about FTX, his cryptocurrency exchange, and commingled funds with Alameda Research, a hedge fund he also controlled.

SBF pleaded not guilty to the charges, and his lawyers have spent the weeks since his arrest trying to keep the names of Paepcke and Kramer secret, arguing that the two would be subject to harassment if their names were made public.

Why the Judge agreed to reveal the identities

US District Judge Lewis Kaplan on January 30th ruled that the public’s interest in revealing the names of the co-signers outweighed their privacy rights.

The judge gave SBF’s lawyers a chance to appeal his decision, but they failed to file a separate request asking the appeals court to pause Kaplan’s order, leading to the names of Kramer and Paepke being unsealed on February 16th.

The crypto community has been searching the web for more details on Paepcke, but there appears to be little information connecting him to Bankman-Fried outside of their association at Stanford University, where Bankman and Fried used to be law professors.

Both Kramer and Paepcke denied having any business interest in the matter or receiving any payment from FTX or Alameda Research. This means that their involvement in SBF’s bail could be nothing more than an act of kindness or a reflection of the close relationships they share with the FTX founder’s parents.

As the legal battle against Bankman-Fried continues, prosecutors and the judge have raised concerns about the terms of his home confinement conditions.

They have expressed worries that SBF has access to tools that allow him to auto-delete and encrypt messages and to use a virtual private network (VPN) that enables him to disguise his internet activity.

The defense has argued that these tools are necessary for Bankman-Fried’s work and that he has not used them to hide anything from the authorities.

Silvergate Bank accused of being in cahoots with SBF-FTX — Details


A lawsuit has been filed against Silvergate Bank and its parent company, Silvergate Capital Corporation, accusing them of aiding and abetting a multibillion-dollar fraudulent scheme orchestrated by Sam Bankman-Fried, the CEO of the cryptocurrency exchange FTX and the cryptocurrency hedge fund Alameda Research LLC. The lawsuit was filed by FTX users.

Silvergate’s dependence on the cryptocurrency industry

Silvergate Bank had become one of the few US banks that catered to cryptocurrency-related exchanges, funds, and customers. This enabled the bank to grow from a small regional bank into a national bank with more than $12 billion in deposits.

Because the bank didn’t have to pay interest on deposits to crypto companies, it was able to invest those deposits in low-risk securities that generated hundreds of millions of dollars in revenue for the bank. Soon, it became entirely dependent on the crypto industry, which comprised 90% of its deposits and nearly all of its profits.

Silvergate also developed a proprietary network called the “Silvergate Exchange Network” (SEN), which allowed exchanges like FTX to offer its customers a 24/7 trading platform for cryptocurrency. In early November 2022, FTX filed for Chapter 11 bankruptcy protection.

FTX’s involvement

FTX was one of the major depositors in Silvergate and the largest user of the SEN network. SEN was also one of FTX’s primary means of payment.

Bankman-Fried, the primary owner of FTX, has acknowledged to utilizing nearly $10 billion in client assets for Alameda, a separate firm owned by Bankman-Fried that specializes in complex and dangerous crypto trading. This information was disclosed in a recent regulatory filing.

Importantly, Silvergate retained the accounts of both FTX and Alameda while being aware that FTX housed investor assets, that Alameda participated in dangerous trading, and that billions of dollars worth of client monies from FTX were sent directly to Alameda and affiliated businesses.

The lawsuit claims that the bank provided significant assistance to FTX by allowing FTX to continue using its accounts and the SEN network despite the fact that the crypto bank was aware of what was taking on and should have known better.

The case is an attempt to recoup part of the nearly $8 billion in client monies that were stolen from FTX. These funds include funds belonging to the plaintiff, Soham Bhatia, as well as about one million additional customers.

The lawsuit contends that these losses would not have occurred if Silvergate had stopped giving FTX access to its accounts and the SEN network when it saw what FTX and Bankman-Fried were doing.

Silvergate Bank and Silvergate Capital Corporation, as well as Alan J. Lane, the CEO of Silvergate Bank and the president and director of Silvergate Capital, have been named as defendants in the lawsuit.

The court has subject matter jurisdiction over the case under the Class Action Fairness Act of 2005 because the matter in controversy exceeds $5 million, exclusive of interest and costs, and there are members of the proposed class who are citizens of different states than the defendants.

In addition, the court has personal jurisdiction over the defendants because of the extensive, ongoing, and systematic nature of the defendants’ interactions with the state of California.

Interactive Brokers enters the booming crypto scene in Hong Kong


An international electronic broker by the name of Interactive Brokers has just stated that they would begin offering cryptocurrency trading in Hong Kong.

Since there has been a rise in demand from Professional Investor customers, Interactive Brokers has made it possible for them to trade digital assets like Bitcoin and Ethereum in addition to the traditional financial markets.

Details on Interactive Brokers’ crypto trading services

Commissions for trading cryptocurrencies via Interactive Brokers Hong Kong are modest, ranging from 0.20% to 0.30% of the transaction value (depending on monthly volume), with a minimum order size of just $2.25 and no additional spreads or markups.

With their low fees, Interactive Brokers is a great choice for anybody in Hong Kong interested in trading cryptocurrencies.

In the past, investors were needed to utilize several trading platforms from a variety of different brokers and exchanges in order to trade cryptocurrencies and other asset classes.

The customers of Interactive Brokers, on the other hand, enjoy the benefits of centralized cash management and have the ability to trade Bitcoin and Ethereum in addition to stocks, options, futures, bonds, event contracts, mutual funds, and exchange-traded funds, all from a single screen.

This implies that customers may trade and see balances via a single platform that gives a consolidated picture. As a result, it is much simpler for customers to manage their portfolios.

Collaboration with OSL Digital Securities

Trading in cryptocurrencies was initially introduced in Hong Kong by Interactive Brokers in cooperation with OSL Digital Securities, the world’s first digital asset brokerage and trading platform for professional investors to be licensed by the Securities and Futures Commission (SFC).

Hugh Madden, CEO of OSL, expressed excitement about the company’s plans to bring their knowledge and experience in the digital asset field to the market via the implementation of these projects.

He went on to say that the introduction of regulated trading services for digital assets represents the beginning of a process that will significantly alter the digital asset market.

In addition, David Friedland, Head of APAC at Interactive Brokers, said that the company is glad to provide cryptocurrencies to fulfill the trading goals of customers in this significant market as investor demand for digital assets continues to expand in Hong Kong and throughout the globe.

Clients who are eligible to participate will reap the benefits of reduced fees as well as the chance to trade cryptocurrencies together with a wide variety of other global goods using a single unified platform.

The entry of Interactive Brokers into the Hong Kong cryptocurrency market couldn’t have come at a more opportune time, as interest in digital assets is rising among investors.

The competitive pricing structure, as well as the partnership with OSL Digital Securities, are anticipated to have a major influence on the market for digital assets in Hong Kong.

By providing its customers with the opportunity to trade Bitcoin and Ethereum in addition to other asset classes, Interactive Brokers is delivering a unified client experience that makes the process of maintaining portfolios simpler and more comfortable.

Does Circle’s regulatory complaint against Binance relate to Paxos and BUSD?


Stablecoin issuer Circle raised concerns with the New York State Department of Financial Services last year regarding Binance’s management of reserves for its own tokens, which it claims are not enough to support tokens issued by the firm.

What Circle claims

The US-based Circle is the issuer of the USDC stablecoin and shares a regulator with Paxos Trust Co., which issues Binance-branded stablecoin BUSD.

Circle alerted the watchdog last year to issues that its team had found in blockchain data that showed Binance did not store enough crypto in reserve to support tokens it had issued, according to a source close to the matter who asked not to be named.

Binance’s under-collateralization of reserves for its version of BUSD has caused issues. Binance pegs or B-Tokens are versions of third-party coins such as Bitcoin, Ether, Circle’s USDC, and Paxos’s BUSD, of which Binance mints billions of dollars worth of.

The company’s goal is to make these tokens usable on other blockchains than the ones they were built for, such as Binance’s own BNB Smart Chain.

The company assures that B-Tokens are backed 1-to-1 by locked reserves of the coins they are based on, stored separately from customer funds, and often do not involve any oversight from the original issuer.

However, Circle has reported that the B-Token version of USDC was impacted, as well as the BUSD, as Binance only had $100 million in stored collateral to support $1.7 billion in Binance-peg USDC.

The USDC issuer claimed that Binance’s storage of cryptocurrency was inadequate to support the tokens issued by the firm. The complaint preceded a warning by the regulator for another stablecoin issuer to end its partnership with the trading platform.

Binance’s management of BUSD

The New York State Department of Financial Services directed Paxos to end its association with Binance, citing “numerous unresolved issues” with regard to Paxos’ oversight of its relationship with the exchange concerning BUSD, the stablecoin that Paxos releases under the Binance brand.

The regulator went on to state that it does not regulate a token that Binance issues as a proxy for BUSD, nor is Paxos authorized to issue it.

The regulator determined that Paxos was unable to manage BUSD “in a secure and sound manner based on comprehensive supervisory involvement, a recent review, and Paxos’ inability to rectify significant issues associated with Paxos-issued BUSD in a timely manner,” a spokesperson for the regulator stated in an email.

As a result, the Department ordered Paxos to halt minting BUSD and to address key deficiencies requiring additional action. The Department is closely monitoring Paxos to ensure that the firm can facilitate redemptions in an organized manner, subject to improved, risk-based compliance protocols.

Binance admitted last month to issues related to its version of BUSD, which was historically undercollateralized. This created a situation in which the company would regularly mint new B-Tokens without first locking up the equivalent collateral in a designated wallet.

Additionally, Binance mistakenly mixed the reserves for almost half of its 94 B-Tokens with exchange-customer funds. A Binance spokesperson stated last month that the company would transfer reserve assets into their dedicated collateral wallets.

Binance has implemented a policy that automatically converts any deposits of USDC and certain other stablecoins on its exchange to BUSD, reducing Circle’s share of the stablecoin market.